Korea: Tax legislative amendments effective for 2021

Korea: Tax legislative amendments effective for 2021

Tax legislation in South Korea was approved by National Assembly in December 2020.


As a follow-up procedure of the tax legislation, the South Korean government in January 2021 announced an implementing decree that is scheduled to be finalized in February 2021.

The tax amendments include:

  • A new integrated investment tax credit scheme—rebuild investment tax credit scheme
  • Relief from investment tax credit requirements for new growth-engine technology commercialization facilities
  • SME outsourcing costs for patent study and analysis as qualified expenditures for R&D tax credits
  • Extended tax credit carryforward period
  • Extended foreign tax credit carryforward period and deduction for unused foreign tax credits allowed
  • Extended net operating loss (NOL) carryforward period
  • Extended applicable period of tax credits for increasing wages
  • Increased threshold for advertisement expense not treated as entertainment expense
  • Increased threshold for entertainment expense not requiring supporting evidence
  • Increased individual income tax rate
  • Tax on non-resident or foreign corporation’s income derived from virtual assets
  • Requiring virtual asset company to submit tax data
  • Clarifying place of supply for electronic services
  • Clarifying determination of related party to whom advance issued is not allowed as bad debt deduction
  • Subjecting a foreign corporation to non-compliance penalty for not submitting payment statement
  • Expanded definition of foreign related party
  • Expanded scope of passive income for controlled foreign corporation (CFC) regime
  • Extended due date for submission of international transaction related data
  • Adding companies for exceptional 100% utilization of NOL
  • Expanded reasons for bad debt write-offs of foreign receivable
  • Establishing basis for allocation of assets and liabilities by industry under thin-capitalization rule
  • Shortening the reporting period for tax data

Read a February 2021 report [PDF 844 KB] prepared by the KPMG member firm in South Korea

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